The Gift of Giving

Every person can have an impact on the community in which he or she lives. The idea of making a gift to a favorite UCC church is a noble one – yet one that takes some thought and planning. People make gifts or bequests to their UCC church for many reasons. Some may want to help those in need or strengthen a religious or spiritual commitment. Some may have a desire to promote justice issues, help educate their community about the UCC or simply want to share one’s good fortune. Ultimately it’s about the desire to give back, but how?

Some donors give of their time and talents, some make gifts of cash or other valuable assets. Many donors are unable to make outright gifts, but remember their UCC church in their wills, or create a split interest gift. A split interest gift may be a way for the giver to donate to his or her UCC church while still retaining an income during their lifetime. It sounds like the best of both worlds, doesn’t it? It may well be just that.

A split interest gift can include remainder trusts and pooled income funds. With a remainder trust, the donor gives assets to a beloved UCC church, for which they can receive a tax deduction. The church, through the use of an annuity, then pays the donor a stream of income for a set period of time or till death. At that time the church receives the remainder of the money, thus the term remainder trust.

A pooled income fund works similarly to the remainder trust, but instead of using an annuity, the church puts the donation into a fund which is invested and assigns the donor units of participation based on the amount of money given. The fund can have one or many donors involved. At the end of each year, the net investment income is distributed to the participant(s) according to their units of participation. At a participant’s death, the donation goes to the church.

Another split interest technique uses a lead trust. Although this method does not generally provide income for the giver, it may provide huge benefits for the heirs. A lead trust helps to reduce the impact of gift and/or estate tax by giving a discount for the money given. It works like this; assets which provide income are given to the church. The church receives this income for the duration of the trust. At that time the assets are returned to the heirs with the gift and/or estate taxes greatly reduced, or even erased.

Charitable contributions offer the donor not only long-term financial benefits and personal satisfaction, but can also offer significant tax savings. In addition, funding projects in your community can have a tendency to “spread the wealth.” For example, if a church decides to build a new building, it may hire a local architect, who may hire a local contractor, who in turn may buy building materials from a local supplier.

In addition to feeling good about yourself and your charity, financial benefits can provide an income tax deduction; can avoid or delay capital gain tax; may increase after tax cash flow or reduce estate taxes. If you want to consider any of these gifting tools you should consult professional legal and tax advisors before making a decision. Speak with a qualified financial professional to determine the strategy that will allow you to create a win-win situation